New York (CNN Business)Two tweets by Elon Musk in the past two years have run afoul of an agreement with the US Securities and Exchange Commission that Tesla lawyers must pre-approve certain posts he makes on the social media site, according to a report by the Wall Street Journal on Tuesday.
The Tesla (TSLA) CEO is known for his casual use of Twitter — where his unusual communication style is unlike that of many other top executives. In 2018, he came under fire after tweeting that he was considering taking Tesla private, and the SEC charged him with fraud. Musk agreed to a court-approved deal in order to settle the charges, which required that Tesla lawyers review any social media posts containing information “material” to shareholders. Months later, after he was called out for defying the order, the settlement was amended to include a specific list of topics Musk needs permission to tweet about. The list includes tweets about the company’s financial condition, production numbers or new business lines.
The SEC notified Tesla that two of Musk’s tweets from 2019 and 2020 — one about Tesla’s solar roof production volumes and one about the company’s stock price — hadn’t received the required pre-approval, the Journal’s Dave Michaels and Rebecca Elliott reported.
Tesla's superfans have made it a social media star. There's a catch.The report does not identify the specific tweets at issue; however, in July 2019, a tweet from Musk that Tesla was “hoping to manufacture ~1000 solar roofs/week by end of this year” immediately raised some questions about whether he had violated the agreement. Read MoreThe Journal cited records it had obtained, including a May 2020 letter written to Tesla by a top SEC official in the agency’s San Francisco office saying that the company had failed “to enforce these procedures and controls despite repeated violations by Mr. Musk” and that Tesla had “abdicated the duties” required by the settlement order.It’s unclear whether the SEC will take action against Tesla or Musk because of the tweets referenced in the Journal’s report. After Musk was charged in 2018 — before he agreed to the settlement — the SEC initially sought to remove Musk as CEO and chairman of Tesla. He ultimately agreed to step down as chairman but remained CEO, while not admitting or denying wrongdoing.
The SEC and Tesla did not immediately respond to a request for comment from CNN Business. They also did not respond to the Journal’s requests for comment. Tesla’s stock took a sharp dip in after-hours trading following the report, but by around 7 pm ET, it was down less than 0.5%.